The Internal Revenue Service has revised the form used by municipalities and other issuers of tax-exempt bonds to make arbitrage-related payments.

The IRS says that the changes to Form 8038-T will reduce paperwork and will help the agency identify potentially abusive transactions.

Arbitrage, the profit that results from investing the proceeds of tax-exempt bonds in higher-yielding taxable securities, is generally required to be paid back to the Treasury.

The new form reduces the number of items to be completed by 20 percent and adds a new section that requests information related to items such as qualified administrative costs, guaranteed investment contracts and the amount of proceeds used to redeem bonds. In addition, the IRS says that the instructions have been re-written in a more "useful, plain-language manner."  

The revised form is available online at

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